DMGT reports 2% rise in group revenue driven by B2B

Ahead of DMGT’s Investor Day tomorrow, the publisher has released a trading update on the Group’s progress for the six months to the end of March 2012.

The Daily Mail publisher has enjoyed a solid performance from its B2B and events businesses, however, it has been hard hit by tougher advertising markets, particularly in Q2, and redundancies and re-organisation costs (mainly in A&N Media).

The group’s update states:

• Group revenue up 2% underlying#
• Good underlying growth from B2B operations
• Resilient revenue performance at Associated; circulation and digital revenue growth largely offsetting print advertising weakness
• Active portfolio management; targeted acquisitions and disposal of non-core assets
• Outlook for the year remains unchanged

Business to Business (B2B)

• RMS delivered continued growth driven by core modelling performance as well as new product areas. The difference between underlying and reported revenues reflects the sale of RMSI in the second half of 2010/11.

• Strong growth at dmgi driven by Property (Landmark and EDR) and Education (Hobsons) businesses.

• dmg events performing as expected with encouraging forward bookings. The movement in reported revenues reflects the low biennial half year and the sale of GLM.

• Continued good performance from Euromoney, particularly from its subscription revenues.

Consumer Media

Associated Newspapers

• Circulation revenues up 4%, benefiting from the effect of cover price increases at the Daily Mail and continued market share improvement; underlying advertising revenues down 3%, comprising newspaper operations down 7% (print -10%, digital +58%, including Mail Online +69%) and digital advertising (primarily jobs and property) up 10%. March saw an improvement in trading with underlying# advertising revenues for Associated up 1%.

Northcliffe Media

• Circulation revenues up 2% on an underlying basis, reflecting the benefit of recent cover price increases. Underlying advertising down 7% in a difficult market across both quarters. Continued focus on efficiency with costs reduced by 13%.

The overall headcount across A&N Media has been reduced by 593 (-9%) to the current level of 6,280.

Group

On an adjusted basis, both operating profits and profit before tax for the first half of the year are expected to be lower than in 2011, although the outlook for the full year remains unchanged.

The half year results will reflect the expected reduced profitability from dmg events and lower profits from Associated due in part to lower advertising revenues, higher average newsprint costs and additional promotional activity in respect of our digital businesses.

Net finance costs will also be higher due mainly to the acceleration of interest of £6 million, being the premium on redemption of £110 million of 7.5% Bonds due 2013, purchased in December 2011.

The Group is likely to report exceptional costs for the half year of around £40 million (around half of which are cash items), mainly in A&N Media. This charge will include reorganisation costs and accelerated depreciation of property, plant and equipment, principally relating to the move of printing facilities to Thurrock.

Investec said DMGT’s results were not as bad as they feared, with B2B (the bulk of the business) continuing to deliver. “We believe shares offer good value with the market under-appreciating the momentum for change/shift to growth.”

See Investec’s forecasts below:

#Underlying revenue is revenue on a like-for-like basis, adjusted for acquisitions, disposals, closures and non-annual events in the current and prior year and at constant exchange rates.